Chemoil reports $19mln loss attributable to equity holders

Sales volumes fell 2% while gross contribution per metric ton slid to $2.4 per metric ton.

SGX Mainboard-listed Chemoil on Friday reported a net loss attributable to equity holders of US$13.5 million ($18.66 million) for the first quarter of 2010 (1Q2010).

Gross contribution per metric ton (GCMT), the company’s key margin indicator, fell to US$1.74 ($2.4) per metric ton for 1Q2010 compared to US$8.74 ($12.1) per metric ton for 1Q2009. Sales volumes reached 3.7 million metric tons for 1Q2010, a fall of 2% compared to 3.8 million metric tons in 1Q2009 - attributable to lower wholesale volumes in Europe, the Americas and Asia, but compensated by higher retail sales.

The company's results were also negatively impacted by certain one-time charges including a loss from the disposal of a delivery vessel and the full realisation of the employee stock option costs due to the accelerated vesting of outstanding options upon the change in majority ownership, according to a Chemoil report.

Chemoil's Chairman and CEO, Mr Mike Bandy, commented: "Despite the continued weakness in the global shipping industry, Chemoil has consolidated its market position in the retail bunker segment as reflected by our improved delivery volumes with 2.5 million metric tons for the first quarter of 2010. This represents an increase of 14% from the corresponding period last year, and accounted for about two-thirds of all our volumes.

"However, we face a continued narrowing of wholesale-retail spreads reaching among the lowest levels in recent years due to weak demand and the lack of cheaper fuel sources."

Chemoil's Chief Financial Officer, Mr Jerome Lorenzo, said: "Chemoil has taken action to improve profitability and operating efficiencies while implementing measures to reduce costs. The company is thoroughly reviewing its operations and aims to reduce commercial and operational risks where possible in order to manage our downside."

While the on-going global recession has impacted parts of Chemoil's business, the company's logistics assets continued to provide stable contribution. Moreover, Chemoil's financial position remains strong with shareholder equity totalling US$291 million ($402.27 million) as of March 31, 2010.

Reviews are being conducted across all elements of Chemoil's business, specifically our leases of storage tanks and our barging operations to optimize cost efficiencies. Chemoil also recently bolstered its management team with the appointment of a new Vice President of Trading for the Americas and a new Managing Director for Chemoil Latin America.

Mr Bandy concluded: "Now that the uncertainty over our ownership and listing status has been resolved, our focus can be directed towards realizing the potential synergies of having two major international trading houses as our shareholders and who will be our partners in delivering value for our customers and shareholders."